As a business owner, one of the most important decisions for you to make is how you would like to be reimbursed for your services. Clients crave stability and need reassurance that their money is being put to use in the right ways, and you can provide them with that security in a variety of ways. There are pros and cons to different methods of collecting payment, so it’s important to consider all of your options before you decide what is best for you and your business.

Determine the payment methods you’ll accept

The nice thing about being your own boss is that you get to decide how you get paid. Regardless of the industry, there are four basic form of payment: cash, credit card, debit card, and check. Each method of payment has it’s advantages and drawbacks, so it is important to consider which method will work best for you.

  • Cash Many people feel uncomfortable paying with cash, especially in large sums. In fact, the Federal Trade Commission (FTC) warns people against paying cash for both small and large projects. Cash payments are considered not as reputable because it is difficult to track transactions, and clients never really know where the money is going. If you do decide that cash is the best option for you, consider giving your clients a written receipt for their transactions, and make your own copy of that receipt. This will minimize the ambiguity of cash and establish a paper trail for finances.
  • Credit card This is perhaps the safest, most popular, and most effective option for collecting payment. It gives both you and your client protection, and transactions are substantially documented. Another benefit of credit card payments is that the client can set up timed-transactions that will automatically come out of their account. This way, you don’t have to call a client every week wondering where your payment is. Some credit cards do have processing fees, and it can take a few days for the transaction to process. Credit cards also have capabilities, which means that the money can be returned to the payer if there is a dispute.
  • Debit card/check *Even though a debit card may look identical to a credit card, they are very different. For example, debit cards do not provide the same safe transactions that credit cards do. In fact, payments with a debit card are extremely similar to writing a check, which is why we have grouped the two together. When a client pays with a debit card or check, the money is immediately withdrawn from their account. This puts both you and your client at risk for overdrafts and account balance minimums. Debit cards and checks do, however, provide a safe and easy-to-follow paper trail for transaction documentation.

Consider offering financing options for your clients

An extremely popular option for accepting payment in the trades industry is financing plans, especially for larger projects. This means that the client will pay you in installments, with a portion of the overall cost paid up front as a deposit. Clients are heavily advised not to pay more than 1/3 of the cost of a project up-front, however, so be considerate and mindful of your deposit fee.

Another popular financing option is “progress payments” or “milestone payments.” This means that you will receive payment upon completion of different, progressing phases of the project. Payments can be calculated based on the percentage of the project completed or by the stage of the project.

If You’re Not Getting Paid

This is a problem that everyone worries about - what if your client isn’t paying you according to schedule, or at all? First, always consult your contract and try reaching out. If that doesn’t work, you can send a “construction demand letter.” This letter is a great way to escalate communication and take the first steps to ensure you are getting paid properly. Plus, if you ever decide to pursue legal action to receive payment, a demand letter is a foundational legal document that can be consulted.

Read more about construction demand letters and how to send one here.

No matter what method you end up deciding to use to collect payment, always remember to establish a transaction trail for both you and your client. This will reduce future headaches, and prepare you if something were to ever go awry.

Deciding how to collect money is a big decision, but don’t let it stress you out. Know your options, understand the pros and cons of each method, decide what is best for you and your clients, and go from there. is here to help your business succeed. Our tools will help you save time and money, understand the ins and outs of business management and spend your days providing exception services to your customers rather than marketing and office tasks. We’ve got your back with practical help managing and growing your business.